A fairly priced stock has an expected return of 15% pa. Treasury bonds yield 5% pa and the market portfolio's expected return is 10% pa. What is the beta of the stock?
You operate a cattle farm that supplies hamburger meat to the big fast food chains. You buy a lot of grain to feed your cattle, and you sell the fully grown cattle on the livestock market.
You're afraid of adverse movements in grain and livestock prices. What options should you buy to hedge your exposures in the grain and cattle livestock markets?
Select the most correct response:
The following is the Dividend Discount Model used to price stocks:
### p_0=\frac{d_1}{r-g} ###
Which of the following statements about the Dividend Discount Model is NOT correct?
Question 407 income and capital returns, inflation, real and nominal returns and cash flows
A stock has a real expected total return of 7% pa and a real expected capital return of 2% pa.
Inflation is expected to be 2% pa. All rates are given as effective annual rates.
What is the nominal expected total return, capital return and dividend yield? The answers below are given in the same order.
A young lady is trying to decide if she should attend university. Her friends say that she should go to university because she is more likely to meet a clever young man than if she begins full time work straight away.
What's the correct way to classify this item from a capital budgeting perspective when trying to find the Net Present Value of going to university rather than working?
The opportunity to meet a desirable future spouse should be classified as:
A young lady is trying to decide if she should attend university or begin working straight away in her home town.
The young lady's grandma says that she should not go to university because she is less likely to marry the local village boy whom she likes because she will spend less time with him if she attends university.
What's the correct way to classify this item from a capital budgeting perspective when trying to decide whether to attend university?
The cost of not marrying the local village boy should be classified as:
A low-quality second-hand car can be bought now for $1,000 and will last for 1 year before it will be scrapped for nothing.
A high-quality second-hand car can be bought now for $4,900 and it will last for 5 years before it will be scrapped for nothing.
What is the equivalent annual cost of each car? Assume a discount rate of 10% pa, given as an effective annual rate.
The answer choices are given as the equivalent annual cost of the low-quality car and then the high quality car.
Question 889 cross currency interest rate parity, no explanation
Judging by the graph, in 2018 the USD short term interest rate set by the US Federal Reserve is higher than the JPY short term interest rate set by the Bank of Japan, which is higher than the EUR short term interest rate set by the European central bank.
At the latest date shown in 2018: ##r_{USD}>r_{JPY}>r_{EUR}##
Assume that each currency’s yield curve is flat at the latest date shown in 2018, so interest rates are expected to remain at their current level into the future.
Which of the following statements is NOT correct?
Over time you would expect the:
Question 896 comparative advantage in trade, production possibilities curve, no explanation
Adam and Bella are the only people on a remote island. Their production possibility curves are shown in the graph.
Which of the following statements is NOT correct?
Question 899 comparative advantage in trade, production possibilities curve, no explanation
Adam and Bella are the only people on a remote island. Their production possibility curves are shown in the graph.
Assume that Adam and Bella cooperate according to the principle of comparative advantage.
Which of the following statements is NOT correct?